Hargreaves Services plc
Interim Results
6 Months Ended 30 November 2010
Successful H1
•
Underlying operating profit increased by 13.3% to £20.9m
•
Profit before tax increased by 9.6% to £16.1m
•
Cash generation on target for year end
•
Interim dividend increased 15.9% to 5.1 pence
•
Note: Operating profit, profit before tax and EPS are all stated before amortisation of intangibles and including share of profits and losses in jointly controlled entities.
Results Highlights
Production
￭ Maltby – challenging geology in H1
– New working practices agreed
￭ Monckton fully contracted for 2011
Industrial
￭
Solid performance from contract base
￭
Focus on tendering new UK and
International opportunities
Transport
￭
Solid performance in Waste and Tanker units
￭
Bulk unit challenging
￭
Minor weather disruption
Energy and Commodities
￭
Strong volumes and margin in the UK and Europe
￭
New joint venture in Europe with major Russian
coal supplier
Operating Highlights
5 Year Track Record
Leaders in Solid Fuel Supply & Bulk Material Logistics
Revenue (£m)
Year ended May 600 400 200 0 09 503.1 HY 296.5 08 404.9 HY 174.3 06 147.0 07 240.1 HY 102.7 10 459.8 HY 211.6 11 HY 253.9
Year ended May
06 7.5 07 10.8 HY 4.1 08 23.6 HY 9.2 09 33.5 HY 16.2 10 38.7 HY 18.5 11 HY 20.9 40 10 25 30 5 0 15 20 35
Underlying EPS Diluted (p) Dividend per Share (p)
Year ended May 15 10 0 5 10 4.4 13.5 HY 11 5.1 HY 06 5.0 07 9.0 HY 3.0 08 10.3 HY 3.3 09 11.8 HY 3.8
Year ended May
06 22.0 07 28.6 HY 13.2 08 51.1 HY 17.4 09 76.3 HY 34.9 10 88.8 HY 41.0 11 HY 43.8 100 60 40 0 20 80
Nov Nov
2010 2009 Movement
£’m £’m £’m %
Revenue
253.9
211.6
+42.3
20.0%
Underlying Operating Profit
20.9
18.5
+2.4
13.3%
EBITDA
29.7
26.2
+3.5
13.4%
Net Interest Expense
3.0
2.0
+1.0
53.0%
Underlying Profit Before Tax
17.9
16.5
+1.4
8.6%
Underlying Diluted EPS
43.8p
41.0p
+2.8p
6.9%
Dividend Per Share (pence)
5.1p
4.4p
+0.7p 15.9%
Income Statement Highlights
2010 2009
£’m £’m £’m %
Production Division
Total Revenue 50.4 41.9 +8.5 20.2% Inter Segment Revenue (8.8) (2.9)
Reported Revenue 41.5 39.0 Operating Profit 4.6 3.9 +0.7 17.4% Operating Margin 9.1% 9.3% 2010 2009 £’m £’m £’m % Transport Division Total Revenue 38.5 34.5 +4.0 11.7% Inter Segment Revenue (5.3) (4.6)
Reported Revenue 33.2 29.9 Operating Profit 2.2 2.1 +0.1 6.0% Operating Margin 5.7% 6.0% 2010 2009 £’m £’m £’m %
Energy & Commodities Division
Total Revenue 149.5 113.3 +36.3 32.0% Inter Segment Revenue (5.0) (1.9)
Reported Revenue 144.6 111.4 Operating Profit 12.1 10.7 +1.4 13.2% Operating Margin 8.1% 9.5% 2010 2009 £’m £’m £’m % Industrial Division Total Revenue 36.0 31.4 +4.6 14.6% Inter Segment Revenue (1.4) (0.1)
Reported Revenue 34.6 31.3
Operating Profit 2.1 1.8 +0.2 13.4% Operating Margin 5.7% 5.8%
Segmental Performance
2010 2009
£’m £’m
EBITDA
29.7
26.2
Working Capital
(26.1)
(17.5)
Operating Cash Flow
3.6
8.7
Interest
(3.0)
(2.1)
Taxation
(3.4)
(5.9)
Acquisitions
–
(4.7)
Net Capital Expenditure
(7.2)
(5.2)
Dividends Paid
(2.4)
(2.1)
Issue of Shares
1.0
1.0
Other
(0.1)
(0.8)
Increase in Net Debt in period
(11.4)
(11.0)
Cash Flow Highlights
Nov Nov
2010 2009
£’m £’m
Goodwill and Intangibles
32.8
36.3
Tangible Fixed Assets
84.4
70.9
Working Capital (Appendix 1)
109.5
81.1
Derivative Financial Instruments
(3.4)
(1.2)
Retirement Benefit Obligations
(5.7)
(3.9)
Provisions
(8.8)
(9.2)
Other Net Liabilities
(10.9)
(11.9)
Net Assets Before Borrowings
197.9
162.2
Net Debt (Appendix 2)
(99.6)
(80.1)
Net Assets
98.3
82.1
Gearing (Debt/Equity)
101%
98%
Net Debt/EBITDA (times)
1.7
1.5
Interest Cover (times)
9.9
13.4
Balance Sheet Highlights
Outlook
Leaders in Solid Fuel Supply & Bulk Material Logistics
Production
￭ Maltby new working practices and
improving geology
￭ All legacy sales contracts completed
in the next 30 months
￭ Rocpower awaiting legislative certainty
￭ Tower planning result expected March 2011
Industrial
￭
Core business secure and stable
￭
Targeting development in Asia
￭
Tenders in process in steel, mining and
Transport
￭
Organic growth Tankers and Waste
￭
Stable in Bulk
Energy and Commodities
￭
UK – England and Wales established
Successful H1 – well positioned H2
•
Remain focused on cash generation
•
Continued growth in Europe – targeted opportunities in Asia
•
Excited by Tower project prospects
•
Summary
Hargreaves Services plc Interim Results
6 Months Ended 30 November 2010
Nov 2010 May 2010 Nov 2009
UK Europe Total UK Europe Total UK Europe Total
£’m £’m £’m £’m £’m £’m £’m £’m £’m
Stock 60.0 24.4 84.4 55.3 26.7 82.0 54.3 13.3 67.7
Trade Debtors 51.3 16.3 67.7 36.2 13.2 49.5 40.9 13.0 53.9 Trade Creditors (28.9) (9.4) (38.2) (31.6) (7.4) (39.0) (26.2) (7.0) (33.2) Trade Working Capital 82.4 31.4 113.8 59.9 32.5 92.4 69.1 19.3 88.4
Other (7.4) 3.0 (4.4) (5.7) (2.3) (8.0) (8.8) 1.5 (7.3) Total Working Capital 75.0 34.4 109.5 54.2 30.2 84.4 60.2 20.8 81.1
Appendix 1 – Working Capital
Nov 2010 May 2010 Nov 2009
UK Europe Total UK Europe Total UK Europe Total
£’m £’m £’m £’m £’m £’m £’m £’m £’m
RCF (63.6) – (63.6) (53.1) – (53.1) (43.1) – (43.1)
Finance Lease Liabilities (15.7) – (15.7) (18.0) – (18.0) (14.6) – (14.6) Invoice Discounting Facility (9.5) – (9.5) (9.8) – (9.8) (10.4) – (10.4) Cash and Cash Equivalents 3.2 10.5 13.7 6.0 11.0 17.0 0.1 7.5 7.7 Overdraft – (24.4) (24.4) – (24.2) (24.2) – (15.3) (15.3)
Other – – – – – – (4.5) – (4.5)
Intergroup Loan 7.9 (7.9) – 8.1 (8.1) – 5.4 (5.4) –
Net Debt (77.8) (21.8) (99.6) (66.9) (21.3) (88.2) (67.0) (13.2) (80.1)
Appendix 2 – Net Debt
Appendix 3 – Coal price
Leaders in Solid Fuel Supply & Bulk Material Logistics
NW Europe Actual January 2010 Forward January 2011 Forward 220 200 180 160 140 120 100 80 60 40 $/t 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
